JOHANNESBURG (miningweekly.com) – There are commitments for continued spending in South Africa next year related to the Phase 2 development of the Mponeng gold mine, new AngloGold Ashanti CEO Kelvin Dushnisky told Mining Weekly Online on Monday.
The proposed Phase 2 expansion of the Mponeng mine in Gauteng involves deepening the secondary shaft to increase the life of the operation.
In the three months to September 30, production at Mponeng was up 25% year-on-year on higher grade and improved mining practices. Despite a weaker performance from the surface operations, this took the South African Operations as a whole to a 3%-higher 120 000 oz at 17%-lower all-in sustaining cost of $1 026/oz.
At question time during his maiden presentation of results and market update since taking over the reins of the Johannesburg- and New York-listed company, Dushnisky revealed that budget discussions are scheduled to take place next week.
“We haven’t finalised our 2019 budget yet. We’re going through the budget cycle and we’ll be discussing that with the board next week, but I can tell you there are commitments for continued spending in South Africa.
“There are commitments for continued spending in South Africa next year related to Phase 2 of Mponeng. That’s something we’ll decide as we go forward so we’ve got time to make that decision over the next while,” he added.
The South Africa region is now cash positive as a result of improved efficiencies and a restructuring. A new union-agreed shift arrangement is also expected to result in increased face time and improved operational efficiency.
AngloGold Ashanti South Africa COO Chris Sheppard reported that the company was continuing with downdip brownfield exploration below the current underground workings of Mponeng, but that the company was not involved in any greenfield exploration locally as it is in most of the other parts of the world where it mines – activity that was singled out for praise by Dushnishky in his interaction with the media.
“Our focus is only in the immediate contiguous areas around Mponeng and we don’t see any potential for further exploration at this stage,” Sheppard added in response to Mining Weekly Online.
The restructuring of the asset portfolio continues in South Africa, focused on protecting the longer-term sustainability of the business by ensuring that both on- and off-mine cost structures are appropriate for the significantly smaller production base.
The Section 189 consultation process, which envisaged the reduction of about 2 000 jobs from the South African workforce, is complete. Forced job losses have been mitigated by the sale of some assets, including healthcare facilities and rail networks in the Vaal River region. The acceptance of voluntary severance packages by some employees resulted in a lower number of forced retrenchments, which will be less than 200 in total, with a further 942 voluntary separations and the balance representing the success in securing job loss avoidance measures, the company stated in its market update.
In Mali, AngloGold Ashanti and Iamgold, who collectively own an 82% interest in the Sadiola gold mine, have initiated a process to identify third parties that may be interested in acquiring their collective interests in Sadiola.
In Tanzania, a new 40 MW power station built by AngloGold Ashanti has begun producing its first electricity at the Geita gold mine.
In Guinea, the Siguiri combination plant is being constructed to treat hard and soft ore. The current circuit is designed to treat soft oxide which is depleting.
The combination project comprises a crushing plant, milling circuit, carbon-in-leach plant, an upgrade of the elution circuit and a new power plant to meet the demands of additional power requirements. The project is at an advanced stage and nearing completion in its execution.
In the three months to September 30, the company recorded its lowest injury frequency rate of four and reduced all-in sustaining cost by 14%.
“It’s been a very fascinating first two months for me. I came into the company optimistic and I’m even more enthusiastic now having spent time understanding the assets and the people better,” Dushisky told Mining Weekly Online.
Some of his initial observations are that there is deep talent throughout the company and a high degree of enthusiasm to move in the right direction.
“The assets are performing well, as is seen from the third-quarter results, and my view is that there’s room still to improve, and I’ve spent time focusing on our operational excellence programme. I’m impressed with the opportunities I see in the exploration portfolio. As we move forward with time we’ll bring more of that to light and I’m confident of value there.
“The team is cohesive. Clearly, the restructuring of the balance sheet over the last while has been very positive. The other comment I’d like to make, which will continue to be a priority for us, is the safety performance. Lowest ever injury frequency rates and the strong focus on safety will continue to be a priority for me.
“We continuing to have a strong and flexible balance sheet. Our net debt to Ebitda ratio is down to 1.1, which puts us in a very good position with strong liquidity. The other thing that I’ve observed is the strong relationship with the stakeholders. I’ve had the opportunity to visit the Obuasi project and meet the Iduapriem team in Ghana.
“In that instance, I had the opportunity to spend time with the Mines Minister and Minerals Council. It was intended to be a brief meeting. We ended up spending around an hour together and I left that meting very confident in the government support to bring Obuasi back into production in particular and the support for Iduapriem and to attract mining investment to the country.
“Threats include the volatile price environment. We’re seeing inflation in various of the jurisdictions where we’re operating and generally speaking, just an uptick in political risk in a lot of jurisdictions. So, that’s something we’ll need to be managing carefully as we go forward,” he told Mining Weekly Online.
At the South African Surface Operations, a feasibility study is expected to be submitted in the first quarter of next year on expanding Kareerand tailings storage facility to allow for treatment of Vaal River tailings.
The AachenTM high shear reactor technology commissioned at Mine Waste Solutions for the refractory portion of the feedstock is expected to improve recoveries.
The underground ramp-up at Kibali is expected to take full year production to 730 000 oz, while mobile equipment deliveries have begun at Obuasi gold mine in Ghana, where a $375-million mining contract has been entered into with the Underground Mining Alliance, which is 70% owned by African Underground Mining Services, a joint venture between Ausdrill and Barminco, both of Australia, with the remaining 30% owned by Rocksure, also of Australia.
Contract works are expected to begin in the first quarter of next year at Obuasi, which was placed on care and maintenance in 2016 pending the commencement of the redevelopment project.
The company intends to develop a modern, mechanised underground mining operation and expects to produce first gold from the redeveloped project by the end of next year. Obuasi has a reserve of 5.8-million ounces and a resource of 34-million ounces.
A new five-year $1.4-billion multi-currency revolving credit facility has been signed to replace the $1-billion and Australian dollar revolving credit facilities.